GURU NANAK ESTATES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) On December 23, 1981, the income-tax authorities carried out a search and seizure against Messrs. Veekay Properties Pvt. Ltd. (referred to as "the company") and its two directors. The petitioner No. 1 (referred to as "the firm") had its office in the same place as the company and the directors of the company were also partners of the firm. In the course of conducting the search at the company's office and residence of one of its directors, certain books of account and other documents relating to the firm were seized. However, no further action was taken by the income-tax authorities against the firm in connection with such seizures.

(2.) More than five years later, the firm submitted a settlement petition to the Commissioner in respect of the assessment years 1979-80 to 1983-84 disclosing its gross receipts by sale of space in a building constructed by the firm and offering to pay tax on the net profit at eight per cent. The petitioner also prayed for leave to pay the tax in six equal monthly instalments or in such other manner as may be settled. The firm also filed an application before the Commissioner for waiver of interest and penalty for the assessment years in question.

(3.) According to the petitioner, the settlement petition had been filed after discussions were held between the partners of the firm and the Commissioner. It is also said that the partners of the firm were assured by the Commissioner that if a true disclosure were made and the petitioners fully co-operated with the Department and also made satisfactory arrangements for payment of tax for the assessment years in question, interest and penalty would be waived and no prosecution would be launched. It is the petitioner's case that the settlement petition was filed pursuant to such assurance.